The Board of Investments (BOI) is confident that its incentives would be spared from any reduction in the second package of the government’s tax reform program, assuring stability at a time when change seemed imminent.
Trade Undersecretary and BOI Managing Head Ceferino Rodolfo told reporters last week that the government agency has so far complied with all four conditions that serve as the guiding principles in deciding which perks should be retained under the second package.
Later this year, the Department of Finance is expected to unveil the second package of the Duterte administration’s comprehensive tax reform program, which would rationalize the country’s fiscal incentives and lower corporate income tax.
According to Rodolfo, both government agencies have so far agreed that the incentives that would be retained in the second package should satisfy four conditions, noting that these should be focused, performance based, timebound and transparent.
Using data acquired through the Tax Incentives Management and Transparency Act (Timta), which was passed under the Aquino administration in a bid to achieve fiscal accountability and transparency with regard to tax perks, the government would later on decide which incentives it would retain.
In the meantime, the top trade official assured investors that the BOI was fully compliant, noting that the agency was even “fiscal positive.”
“We don’t have any problem with the four principles. In terms of [Timta] data, we also don’t have any problem. In terms of support to the strategic objectives of the Duterte administration and Ambisyon 2040, all of that is included [in our goals,]” he said.
Citing Timta data, he said that there were claims of P43.7 billion worth of incentives in 2015, but BOI endorsed only half or P24.4 billion to the Bureau of Internal Revenue because these were “really scrutinized to see if they comply with all of our requirements.”
Moreover, for the same year, BOI paid a total of P24.7 billion worth of taxes.
“So, in effect, what you gave out as an incentive is being returned to you as a tax,” he explained, adding that BOI investments were timebound because of the four- to six-year cap of the income tax holiday.